The first round of Ukraine's presidential election was a close-run thing.
According to the official returns - published 10 days after the October 31
poll - Viktor Yushchenko, the democratic opposition candidate, won 39.9
per cent of the vote, narrowly beating Viktor Yanukovich, the current prime
minister, who won 39.3 per cent. On November 21, a run-off will determine
the final outcome.

In spite of the slender margin, these elections were an outstanding victory
for Mr Yushchenko and the democrats. The incumbent regime used all means
against him. The national TV channels supported Mr Yanukovich. According
to Mr Yushchenko's campaign, Mr Yanukovich's election budget amounted to
$600m - that is, 1 per cent of Ukraine's gross domestic product and as much
as George W. Bush's presidential campaign, although America's GDP is 100
times greater than Ukraine's. Mr Yushchenko even narrowly escaped an
alleged poison attack that has left his face visibly scarred.

All credible international observers agree that fraud was rampant.
Undoubtedly, some of the votes cast for Mr Yushchenko were illicitly
reallocated to Mr Yanukovich. Yet the Ukrainians understood the stakes
and stood up for their democratic choice with a participation of 75 per
cent. Most of the votes for minor candidates are likely to go to Mr
Yushchenko in the final round.

But why are Ukrainians dissatisfied with their current government? After
all, Ukraine has currently one of the world's most vibrant economies. For
the past five years, Ukraine's GDP has grown by an annual average of 9
per cent and so far this year it has surged by 13.4 per cent. Like Mr
Yushchenko, Mr Yanukovich favours further market-orientated reforms.
What has brought so many to the polls is the contrast between the two
candidates' visions for Ukraine's political system and geopolitical
orientation.

Mr Yushchenko stands for western-style democracy, against corruption
and for a European orientation and membership of Nato; Mr Yanukovich
represents the biggest oligarchic group in Donetsk in Russian-speaking
eastern Ukraine and is seen as pro-Russian.

Rarely has any foreign country been as engaged in the elections of another
as Russia has been in these. Russia's President Vladimir Putin even came to
Kiev to campaign for Mr Yanukovich on national television five days before
the elections. Dozens of Moscow's loud-mouthed political advisers have
descended on Ukraine. On Ukrainian and Russian television, they have
declared Mr Yushchenko a dreadful person and Mr Yanukovich wonderful
(although he has served two prison sentences for violent crimes).

This heavy-handed interference appears to have backfired. Most Ukrainians
have a positive view of Russia, but nobody likes this treatment. Contrary to
expectations, Mr Yushchenko carried much of Russian-speaking Ukraine.

Not that a Yanukovich victory would necessarily benefit Russia. It is ironic
that, after having defeated his own oligarchs, Mr Putin is supporting a much
more oligarchic party in Ukraine. Mr Yanukovich is closely allied with Rinat
Akhmetov, owner of System Capital Management, the Donetsk-based
conglomerate that controls seven big steelworks. Mr Akhmetov seeks to
keep Russian companies out of his Donetsk principality and his friend
Mr Yanukovich might well take a similar line in the rest of Ukraine. By
contrast, as prime minister in 2000, Mr Yushchenko settled the large
arrears to Russia for gas imports and allowed big Russian companies to
buy businesses.

The current Russian campaign seems to be motivated largely by a desire to
keep Ukraine out of the arms of the west. But it is swimming against the
economic tide. Regardless of who wins, Ukraine will sooner rather than later
need to enter the World Trade Organisation because of its dependence on
exports of sensitive commodities such as steel, chemicals and agricultural
products. It must improve its poor relations with the European Union for
similar reasons.

It is time for the Kremlin to wake up to the democratic facts. Viktor
Chernomyrdin, Russia's ambassador to Ukraine, appeared to acknowledge
that a Yanukovich victory was not vital for Russia when he remarked after
the first-round election that "anybody who becomes Ukrainian president
will be compelled to develop good-neighbourly relations with Russia".

A President Yushchenko could lead Ukraine to true democracy and
western integration. Russia would be well advised to follow his lead. -30-
----------------------------------------------------------------------------
The writer is director of the Russian and Eurasian Programme at the
Carnegie Endowment for International Peace, Washington, D.C.
=======================================================
ACTION UKRAINE REPORT-04, No.215: ARTICLE NUMBER TWO
=======================================================
2. RUSSIAN PAPER SEES ANOTHER TRIP BY PUTIN TO UKRAINE
AS ATTEMPT TO SWAY UKRAINE'S PRESIDENTIAL VOTE

Russian President Vladimir Putin's forthcoming visit to the Crimea is timed
to boost support for presidential candidate Viktor Yanukovych, says Russian
newspaper Kommersant. Putin is the trump card wheeled out by the Ukrainian
authorities to help their favoured candidate Yanukovych following the news
that his rival, Viktor Yushchenko, emerged in the lead from the first round
of elections and is now receiving support from those candidates knocked out
of the presidential race.

The following is an excerpt from the article by Andrey Chernikov published
by the newspaper on 11 November:

Yesterday, the Ukrainian Central Electoral Commission [CEC] announced the
results of the first round of the presidential election. Based on 100 per
cent of the votes processed, CEC Chairman Serhiy Kivalov announced that the
former prime minister, Viktor Yushchenko, was leading over the current prime
minister, Viktor Yanukovych, by 0.55 per cent. Meanwhile, Mr Yushchenko
began receiving offers of support from candidates who have dropped out of
the race.

In light of the situation that has developed, the authorities have played
their strongest trump card: tomorrow Russian President Vladimir Putin flies
to Crimea. The pre-election nature of this trip is obvious. [Passage
omitted].

As for Viktor Yanukovych, whose candidacy is backed by the present
authorities not only of Ukraine, but also of Russia, only the Women for the
Future association has so far declared support for him. This organization
put forward candidates for the parliamentary election in 2002 but did not
win any seats, and it did not have its own candidates in the presidential
election.

In this situation the news that Russian President Vladimir Putin would be
flying to Crimea on Friday [12 November] came like a bolt from the blue.
Olha Udovina, a minister from the Council of Ministers of the Autonomous
Republic of Crimea, confirmed this news yesterday. However, neither the
Ukrainian nor the Crimean authorities are saying what this visit is
connected with. It is assumed in the Crimean government that there is
a direct link between this trip and the Ukrainian elections.

As Yelena Gulyayeva, an adviser in the Crimean government's press
service, observed, this visit is unlikely to be linked to any festival or
celebration. "We recently had Ukrainian Literature Day, and the next
holidays will be on 16 November, Communications Workers' Day and
Tolerance Day, and 17 November, Students' Day," Gulyayeva said.

Kommersant's sources in the Ukrainian Presidential Administration suggest
that Putin will arrive in Kerch. He will be met by Ukrainian President
Leonid Kuchma. Most likely Prime Minister Yanukovych will go there too.

On 28 October, three days before the first round of the voting, Vladimir
Putin visited Ukraine. He participated in the celebrations on the occasion
of the 60th anniversary of the liberation of Kiev from the German fascist
invaders (although in actual fact that event took place on 6 November 1944 -
Kommersant). During that visit the Russian president had appeared on three
national TV channels and said a lot of good things about the government of
Viktor Yanukovych and many people perceived this as electioneering.

There is also something to talk about this time round. Yesterday, the
Russian State Duma ratified an agreement on preferential arrangements for
Ukrainian citizens to stay in Russia. -30- [Action Ukraine Monitoring]
=======================================================
ACTION UKRAINE REPORT-04, No.215: ARTICLE NUMBER THREE
=======================================================
3. RUSSIA'S GRAVITATIONAL PULL IN EURASIA STANDS TO
STRENGTHEN AFTER UKRAINE ELECTION

The outcome of Ukraine's contentious presidential vote could have
far-reaching ramifications for the US-Russian geopolitical competition in
Central Asia and the Caucasus. An election victory by Prime Minister Viktor
Yanukovich, who is widely viewed as Russia's preferred candidate, could
embolden Kremlin efforts to enhance its position in the energy-rich Caspian
Basin.

Yanukovich is set to face opposition candidate Viktor Yushchenko, a
Western-oriented reformer, in a run-off vote on November 21. Since the first
round of voting October 31, campaigning has been marked by acrimony, with
both sides hurling allegations of voter fraud at the other.

Russian President Vladimir Putin's administration has made no secret of its
desire to prevent Ukraine, long viewed in Moscow as Russia's "little
brother," from drifting Westward. In pursuit of their goals, Russian leaders
have played on the vulnerabilities of Ukrainian political leaders. In 2000,
for example, President Leonid Kuchma became embroiled in a scandal after
the release of a secretly recorded tape on which the president appeared to
sanction the assassination of a Ukrainian journalist. Since then, Russia has
provided strong political support for Kuchma, helping ensure the president's
political survival. Not surprisingly, Kuchma has steered Ukraine away from
NATO and EU integration in recent years.

Yanukovich has also been a central figure in Ukraine's tilt towards Russia,
and the Kremlin reportedly has used its influence to help bankroll his
presidential campaign. Some experts believe that, like Kuchma, Russia is
exploiting Yanukovich's troubled past - specifically the fact that
Yanukovich served time in jail as a young man for robbery and assault. There
is speculation in both Moscow and Kyiv that Russian officials may possess
more "compromat," or embarrassing information, on Yanukovich that they
could use in the future to coerce him.

In Moscow, observers already characterize the potential relationship between
Putin and Yanukovich as that of a security services case officer handling an
"asset." A Kremlin source indicated that Putin, a former KGB agent, is
personally disdainful of Yanukovich's unsavory past. Nevertheless, the Putin
administration badly wants Yanukovich to be elected, as it would likely
cement Ukraine in a position of dependency regarding Russia.

Given the high strategic stakes involved, observers in Washington believe
Russia is willing to go to great lengths to secure Yanukovich's election.
His victory would free Russia to devote more attention and resources to
bolstering its geopolitical interests elsewhere, in particular Central Asia
and the Caucasus.

Moscow is especially keen to improve its position in the competition over
Caspian Basin energy. Moscow's primary opponent in this sphere is the
United States, which since the September 11 terrorist tragedy has increased
its strategic profile throughout the Caspian Basin. [For additional
information see the Eurasia Insight archive]. Washington is also the main
sponsor of the Baku-Tbilisi-Ceyhan pipeline, an energy conduit that will
break a Russia's virtual monopoly on Western-oriented energy export
routes. [For additional information see the Eurasia Insight archive]. Of
late, however, China has also entered the energy fray, working with
Kazakhstan to establish a pipeline network that would transport energy
to the East. [For background see the Eurasia Insight archive].

At present, there are several points in Central Asia and the Caucasus where
Russia could apply pressure in an attempt to reorder the geopolitical
calculus. Some observers expect Russia to increase pressure on Kazakhstani
President Nursultan Nazarbayev, who has aggressively pursued a
"multi-vector" policy in recent years that is designed to play Russia, the
United States and China off against each other in the energy contest. One
way Moscow can attempt to influence Kazakhstani policy is to play the
nationality card, stirring up discontent among the large ethnic Russians
community in northern Kazakhstan.

Other analysts suggest the Kremlin's attention may turn to Azerbaijan, a
country whose relationship with the United States has appeared to ebb over
the past year. [For background see the Eurasia Insight archive]. Reports of
infighting within the ruling party in Baku have prompted speculation that
President Ilham Aliyev's authority is shaky. Russia could thus try to repeat
the "Kuchma scenario" in Azerbaijan, providing strong political support that
helps Aliyev to preserve and consolidate his authority. In return, Moscow
would no doubt demand closer Azerbaijani cooperation on energy-related
issues, as well as on the ongoing conflict in Chechnya.

Uzbekistan is another country that has experienced recent trouble in its
relations with the United States, underscored by the US State Department's
decision last July to sanction Tashkent because of the Uzbek government's
poor human rights record. [For background see the Eurasia Insight archive].
President Islam Karimov of late has signaled a desire to improve relations
with Russia, and Moscow seems eager to reciprocate. At an October
ceremony marking the admittance of Russia into the Central Asian Coop-
eration Organization, Karimov championed Russia's "legitimate" right to play
a large role in regional developments. "We here in the region acknowledge,
have acknowledged and will continue to acknowledge Russia's interests -
its strategic interests and the historical aims and tasks Russia pursues in
this region," Karimov said.

Georgia is another logical focus for Russian officials. However, any designs
that Moscow may have on Georgia may be complicated by the continuing
political turmoil in the separatist region of Abkhazia. [For background see
the Eurasia Insight archive]. Russian officials, without doubt, view
Georgian President Mikheil Saakashvili, specifically his desire to reunify
the country and push it into the embrace of NATO and the EU, as a threat to
Russian interests. However, Russia has traditionally depended on its ability
to manipulate Georgia's separatist regions - Abkhazia and South Ossetia - in
order to exert pressure on Tbilisi. The Abkhaz turmoil would appear to
deprive Moscow of this lever of influence, at least on a temporary basis.

Given the US preoccupation with the insurgency in Iraq, Washington's ability
to counter Russian moves in Central Asia and the Caucasus would seem
limited. In addition to the fact that Iraq is consuming most of the United
States' strategic resources, American officials say their chief aims vis a
vis Russia are maintaining its participation in the anti-terror coalition,
and keeping access open to Russian energy reserves. These policy
priorities, US officials quietly admit, act as a restraint on Washington's
desire to check Russian expansionist impulses in Central Asia and the
Caucasus. -30- [Action Ukraine Report Monitoring Service]
----------------------------------------------------------------------------
Editor's Note: Ariel Cohen, Ph.D., is a Research Fellow at the Heritage
Foundation in Washington, D.C., and co-author and editor of "Security
Changes in Eurasia After 9/11," Ashgate, 2005 (forthcoming).
-------------------------------------------------------------------------http://www.eurasianet.org/departments/insight/articles/eav111004.shtml
========================================================
ACTION UKRAINE REPORT-04, No.215: ARTICLE NUMBER FOUR
Your comments about the Report are always welcome
========================================================
4. CONCERN RISES IN US AND EU OVER RUSSIA'S
GROWING HOSTILITY TO THE OSCE

LONDON - An unarmed British soldier looks through high-powered
binoculars across the steep mountain valley on Georgia's border with
Russia.

His seemingly innocuous role as part of a multinational team from the
Organisation for Security and Co-operation in Europe is observing - but
not intervening to prevent - illegal crossings. His role, and that of many
others like him, is at the heart of a widening dispute between Russia and
the west over who should be responsible for such sensitive areas. Similar
concerns contributed to the postponement this week of a summit between
Russia and the European Union.

Moscow argues that the OSCE has taken an intrusive and hypocritical
interest in the affairs of the former Soviet Union, particularly on issues
such as election and border monitoring. Diplomats from the US and the
EU suspect that an increasingly authoritarian Kremlin is trying to sabotage
the organisation and break free of OSCE oversight in Russia's traditional
"near abroad".

"What is going on in the OSCE is . . . worth watching because it is a
barometer of the political atmosphere in Europe today," Jan Kubis, OSCE
secretary-general, said recently. "There are symptoms, even warning signs,
that our desired co-operative spirit and unity of purpose are eroding."

Concerns about Russia's growing hostility to the OSCE, together with moves
by President Vladimir Putin to consolidate his power prompted the US State
Department to express "anxiety" about Russia.

Similar worries are behind the difficult relations between Russia and some
EU officials. It took some lobbying by the European Union to prevent this
week's postponed Russia-EU summit from being cancelled altogether. It is a
far cry from the days in the mid-1990s when Russia wanted the OSCE to
develop into Europe's chief international organisation.

Founded in 1975 as the Conference for Security and Co-operation in Europe,
it has expanded greatly and now comprises 55 member states in Europe,
North America and the former Soviet Union. Officials pride themselves on
their role in defusing conflicts in the former Yugoslavia and beyond. But
Russia complains that in spite of the presence of the border monitors the
organisation does not give sufficient emphasis to security and gives too
much to human rights in the former Soviet Union.

A toughly worded communiqué by Commonwealth of Independent States
leaders this July slammed the OSCE for "double standards" and "politicised"
election monitoring - although such attacks did not deter the OSCE from
criticising the first round of Ukraine's presidential election last month.

Alexey Borodavkin, Russia's ambassador to the OSCE, has criticised the
organisation's "selective and biased" appointment of observers to elections
in Belarus. He has called for the OSCE to return to its "original function"
of "political dialogue" and "decisions on the most important security issues
in Europe".

For almost a year, Russia has refused to reaffirm commitments made to the
OSCE in 1999 to withdraw troops from Georgia and Moldova. It is also
blocking some OSCE funding unless its concerns are addressed, a move that
has infuriated the US. A similar tough Russian line on the 2002 budget led
to the OSCE closing down a mission in Chechnya.

One key dispute is the organisation's mandate on the Georgian border, put in
place in 1999 amid Russian charges that Georgia was harbouring Chechen
rebels. The mandate comes up for renewal at the end of this year and Russia
is attempting to close it. "The mission works well, but it is costly and no
longer needed," says one Russian diplomat, citing the annual Euro15m ($19m,
£10m) fees.

However, Russian military officials also regularly hint at the need to
launch strikes against Chechen militants in the Pankisi valley in Georgia.
The absence of the OSCE from the region could give Moscow a freer hand.
"Russia has always pulled back [from destroying the OSCE] in the past,
because they see it is an instrument for promoting stability," said an OSCE
diplomat. "But some in Russia argue it is more a nuisance than a help in
achieving their objectives." -30- [Action Ukraine Monitoring Service]
========================================================
ACTION UKRAINE REPORT-04, No.215: ARTICLE NUMBER FIVE
Your comments about the Report are always welcome
========================================================
5. PM/PRESIDENTIAL CANDIDATE VIKTOR YANUKOVYCH
WANTS UKRAINE MORE COMPETITIVE ON THE
INTERNATIONAL ARMS MARKET

KIEV - The Ukrainian prime minister and presidential candidate, Viktor
Yanukovych, has called for making Ukraine more competitive on the
international arms market. Addressing a Defence Ministry sitting, Yanukovych
pledged to restore servicemen's cancelled benefits ahead of the presidential
runoff on 21 November. The following is an excerpt from a report by the
Ukrainian One Plus One TV on 11 November:

[Presenter] The state of the Ukrainian armed forces and the
military-industrial complex leaves much to be desired, Prime Minister Viktor
Yanukovych has said. He was chairing a Defence Ministry sitting summing up
its performance. Defence Minister Oleksandr Kuzmuk warned generals against
reporting their achievements and said problems should be discussed. [Passage
omitted: Presenter lists problems facing the army.]

Olena Matsyutska reports about defence industry development programmes.
[Correspondent] Kuzmuk said at the beginning of the sitting that it would be
unusual and that it is not triumphant reports but work that is expected from
the generals.

[Kuzmuk] There will be a clear analysis of the real state of affairs today.
There will be no accusations levelled at the predecessors today. This is not
the way generals do things. There are problems. You will be appointed to
solve them. If you fail to do so, you yourselves will become a problem.
[Correspondent] Yanukovych was the next to take the floor. His first words
were about the critical state of affairs. [Passage omitted: Correspondents
dwells on army problems.]

[Correspondent] The government earmarked 6.5bn hryvnyas [more than
1.2bn dollars] for the army in next year's draft budget, which is 60 per
cent more [presumably on this year].
[Yanukovych] We decided to restore privileges to servicemen and their
family members at the latest Cabinet of Ministers sitting. [Applause] Over
the next two years we will restore servicemen's privileges envisaging free
annual leave travel, food rations and utility bills. [Passage omitted:
Correspondent says servicemen's housing problems will be dealt with.]

[Correspondent] The Finance Ministry has been instructed to earmark
funds to step up military reform. It is expected that 235,000 servicemen
will remain in the army by the end of the year. Upgrading and providing
incentives to the defence industry is also a priority, which is meant to
produce something new for the army and to boost [Ukraine's]
international profile.
[Yanukovych] We have seen of late that many countries in the world have
been upgrading their own armed forces. We as a state which is a member
of the elite club of advanced arms producers should certainly make use of
this. I am confident that we are obliged to work more aggressively and
energetically, as the competition on the arms market is becoming
increasingly tougher year by year. We have no right to lose. History
would not forgive us.

[Correspondent] Yanukovych called for the creation of a state reserve
development fund to implement the army and defence industry support
programmes. Obsolete weapons should be scrapped using scientific methods
so that the Novobohdanivka and Artemivsk accidents [massive explosions
of ammunition in southern and eastern Ukraine] never happen again. Those
arsenals were already passed to Ukroboronservis [a subsidiary of the
Ukrainian state arms trader Ukrspetseksport] to scrap the ammunition. The
Defence Ministry is in talks with NATO for the alliance to finance the
scrapping. -30- [The Action Ukraine Report Monitoring Service]
======================================================
ACTION UKRAINE REPORT-04, No.215: ARTICLE NUMBER SIX
Your comments about the Report are always welcome
======================================================
6. U.S. OBSERVATION MISSION HAD YANUKOVYCH TIES
Trip to Ukraine organized by prime minister's aid; casts
doubt on group's rosy report about Oct. 31 vote

KYIV - A trip to Ukraine by former U.S. congressmen who declared
the Oct. 31 presidential election fair was organized in part by an associate
of candidate Prime Minster Viktor Yanukovych, casting doubts on their
report's objectivity.

Alex Kiselev, a Ukrainian-born investment manager who is Yanukovych's
U.S. strategy advisor, said that he paid up to 50 percent of the cost of the
visit by seven former congressmen and five election experts. The trip cost
about $170,000, with the portion that Kiselev did not cover paid for by
several private U.S. donors.

"The elections passed within the framework of the law, were transparent,
and any infringements which were revealed did not put doubt upon the
results of the election," delegation head Bob Carr, a former Democratic
member of the U.S. House of Representatives from Michigan, said at a
Kyiv press conference on Nov. 1.
.
The report by Carr's group outraged other election observers. A report
from a group of 25 former legislators from the U.S., Spain, Britain,
Holland and Germany concluded that all observers found the election
below international standards and a "step back from democracy" -
except those observers sponsored by organizations tied to powerful
politicians in Kyiv.
DIASPORA BLUES
Kiselev, a managing partner at North Atlantic Securities, a brokerage
firm registered in Maine, denied having any specific interest in Ukraine's
presidential elections, saying he has no business interests in the country.
He said he financed the delegation of observers solely to disseminate
points of view about the elections that were not pro-Yushchenko.

He admitted to being tired of commentary about Ukraine informed by the
West's Ukrainian Diaspora, which tends to be pro-Yushchenko and anti-
Yanukovych. A native of Odessa, he does not consider himself a member
of the Diaspora.

He denied that any delegation members received remuneration, beyond
coverage of their travel and hotel expenses. A few times they were
taken out for dinner, but that's it," he said. Carr did not return the
Post's requests for comment. -30- [Action Ukraine Monitoring]
-----------------------------------------------------------------------
Kyiv Post, Kyiv, Ukraine, Thursday, November 11, 2004
LINK: http://www.kyivpost.com/nation/politics/21793/
========================================================
ACTION UKRAINE REPORT-04, No.215: ARTICLE NUMBER SEVEN
========================================================
7. MORE THAN ONE MILLION USD PAID TO AMERICAN PR
COMPANIES FOR PROMOTING PM VIKTOR YANUKOVYCH'S
IMAGE IN USA- UKRAYINSKA PRAVDA

UNIAN, Kyiv, Ukraine, Thursday, November 11, 2004

KYIV - Since March of 2003, American public relations firms have
received some 1 million 41 thousand dollars in payments on contracts,
which were concluded for the purpose of promoting a positive image of
Victor Yanukovych, Prime-Minister and Ukrainian presidential candidate,
according to the "Ukrayinska Pravda" web-site in Kyiv, Ukraine.

The following is the summary in English of the article "The Image of
Yanukovych in the USA" by Lyuba Shara that appeared in Ukrainian on
the Ukrayinska Pravda web-site November 11:

UP discloses that, according to information that was obtained from the
U.S. Department of Justice, contracts were signed with the following
firms:

Ukrainian portion of the contracts was signed by Alek Kiselev, Odessa
native, who has been in the United States since 1992, and is Viktor
Yanukovych' U.S. strategy counselor. UP writes that it was mainly
Kiselev who handled all the accounts, which were registered with the
United States Department of Justice.

According to UP, the strategy of the Yanukovych PR-campaign in the
USA "is focused on three major objectives: portraying Yanukovych as
a liberal and a representative of the "new Ukraine"; showing Yushchenko
as an anti-Semite, and portraying the presidential election campaign in
Ukraine as being free and fair, which is the beginning of legitimizing
the eventual election of Yanukovych in the eyes of the American
community.

The first objective of the program, according to UP, is now being
implemented by the above-mentioned PR-companies, which, in particular,
is to make telephone calls, hold meetings, have conversations, attend
dinners, etc., "with the leading representatives of the Washington power
structures". The idea of Yanukovych as a representative of the "new"
Ukraine was not created by the author of the UP article, but was taken
from the agreement between the Venable law firm and A.Kiselev, signed
March 7, 2003, according to the author of the article.

The second objective of the program, according to UP, is being handled
by A.Kiselev personally, this is the dissemination of information about
the "anti-Semitism views of Victor Yushchenko, a member of parliament
and the front-running presidential candidate, and Ukrainian-Americans in
the USA".

As an example of this view, UP cites the Washington Jewish Week
web-site, which stated in an article that "Kiselev is also concerned
that Yanukovych is not getting a fair hearing in the States, complaining
that Ukrainian Diaspora groups that lobby in this country and support
Yushchenko came following World War II and lived in Ukrainian areas
where many residents were Nazi collaborators."

The third objective of the program, according to the author of the UP
investigation, was to be implemented by a group of former U.S.
Congressmen, who, while visiting Ukraine during the first round of the
Ukrainian presidential election on Oct 31, would conclude and report
that the elections were "free and fair".

UP explains that this conclusion outraged members of the U.S.
Association of the Former Members of Congress, who have been
concerned about what has been going on in Ukraine. Association members,
together with the U.S.- Ukraine Foundation, through a program funded by
the USAID, organized four trips of former Congressmen to Ukraine to
observe the election campaign.

These delegations reported that there were numerous violations committed
in Ukraine in the run-up to the Ukrainian presidential elections. Later
these violations evolved into faults and frauds committed during the
election, which was confirmed by many reputed international observers.

The delegation of former Congressmen (all Democrats), headed by Bob
Carr, a former Democratic member of the U.S. House of Representatives
from Michigan, arrived at a surprising conclusion: "the elections passed
within the framework of the law, were transparent, and any infringements
which were revealed did not put doubt upon the results of the election".

This was reported at a press conference held in Kyiv on Nov. 1. They
were accompanied by a translator, who acted as their manager and
organizer. UP has a hunch according to the article that this translator
was probably Alex Kiselev, and this turns attention to the fact that
during this press conference the Congressmen were asked about the
grounds of their conclusion, and said that they based their conclusion
only on what they actually saw.

An official observer from the USA at the Ukrainian elections, who
asked to remain undisclosed, agreed to give an interview to an UNIAN
correspondent. He stressed that the trip of this delegation to Ukraine
raises many serious questions. The news agency's interlocutor said the
trip of this delegation, and, more than that, its conclusion, was a big
surprise to those who have been monitoring the Ukrainian elections.

He supposes that these former Congress members, maybe, were not
adequately briefed about the real situation regarding the entire election
process in Ukraine, and about the hundreds of different possibilities
about how the fraud can happen on election day. According to journalists,
who were present at the press conference, the Congressmen seemed to
feel uneasy, and seemed like they wanted to put an end to their meeting
with the journalists as soon as possible. To put it shorter, Stalin called
such people "useful idiots".

Based on the above-mentioned information, UP raises several questions
for Yanukovych: according to his income declaration, he does not have a
personal car, so from what sources are those Washington PR-companies
paid? What funds were received by Kiselev? He is the person who directly
pays the PR-companies. This issue will be the theme of the next
investigation.

Take a look at the declaration that he personally filed with the U.S.
Department of Justice: it says that Alex Kiselev is a volunteer assistant of
Mr.Yanukovych, and he does not receive any money for his activities. At
the same time, since March of 2003, he has paid $1,041,369.50 to
Washington PR-companies for promoting Mr. Yanukovych's image?

The question now is, was this a generous personal contribution from
Mr.Kiselev? Another question is: who provided the funds to pay for the
trip of 12 people who were a part in the former Congressmen Bob Carr's
delegation to Ukraine? If Yanukovych is so clean and pure, how does he
pay such large amounts of money for his public relations? -30-
------------------------------------------------------------------------
Ukrayinska Pravda: www.pravda.com.ua
UNIAN link: http://www.unian.net/eng/news/news-65203.html
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ACTION UKRAINE REPORT-04, No.215: ARTICLE NUMBER EIGHT
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8. INTERNATIONAL HUMAN RIGHTS WATCHDOG CITES
CAMPAIGN VIOLATIONS IN UKRAINIAN PRES ELECTION
Government interfered in all stages of the presidential election

Natasha Lisova, AP Worldstream, Kyiv, Ukraine, Thu, Nov 11, 2004

KIEV - An international human rights watchdog said Thursday that the
Ukrainian government had interfered in all stages of the presidential
election campaign and vote in the latest sign of international concern over
democracy in the ex-Soviet republic.

The critical account from the International Helsinki Foundation for Human
Rights came a day after Ukrainian election officials announced the
much-delayed final results from the Oct. 31 vote.

Opposition leader Viktor Yushchenko won 0.5 percent more votes, with
39.87 percent, than Prime Minister Viktor Yanukovych, forcing a runoff
on Nov. 21, elections officials said. A first-round victory would have
required one of the 24 candidates to receive more than 50 percent of the
vote.

The rights watchdog said the campaign ahead of the first round was marred
by "gross violations of fundamental human rights and principle freedoms." It
accused authorities of "the persecution of dissenters," using law
enforcement bodies as an "instrument of political struggle," media bias in
favor of Yanukovych and state interference in "all stages of the process and
the vote itself."

Earlier this month, observers representing the Organization for Security and
Cooperation in Europe, the Council of Europe, the European Parliament and
NATO said Ukraine's presidential election did not meet European standards
for democracy, citing state media bias in Yanukovych's favor and state
interference including obstruction of opposition activities.

On Thursday, Canadian Ambassador Andrew Robinson urged "much greater
transparency" in the second-round vote, saying: "Openness and transparency
are critical to credibility," the embassy said.

The vote is seen as a key test of democracy in this nation of 48 million
people and an indicator of what direction Ukrainians will choose for their
nation, which has cultivated ties with the West and neighboring Russia.
Yushchenko, a reform-minded former prime minister, is seen as likely to push
Ukraine closer to the European Union, while Yanukovych, who has the backing
of outgoing Ukrainian President Leonid Kuchma and the Kremlin, is considered
pro-Russian. -30- [The Action Ukraine Report Monitoring Service]
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ACTION UKRAINE REPORT-04, No.215: ARTICLE NUMBER NINE
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9. WHOSE DEMOCRACY AHEAD IN UKRAINE?

KIEV, Ukraine -- Western advertising mixes with Stalinist architecture
in this nation of 47 million people. Ukraine, like America, has been in the
midst of a heated presidential election. And international issues -
especially Ukraine's relationship with the U.S. - have taken center stage.

The initial ballot on Oct. 31 sent two of 24 candidates into a
runoff: current Prime Minister Viktor Yanukovych and former Prime
Minister Viktor Yushchenko.

Many Westerners see the election as a cataclysmic struggle
between pro-American and pro-Russian forces. But Konstantin
Bondarenko, director of the Institute of National Strategy, is more cynical:
"The Yanukovych camp is the people in power who want to stay in power.
Yushchenko represents the people who had been in power and want to
get back into power."

Democracy has proved messy in this former Soviet republic.
The campaign has been marred by questionable practices, most directed
against Mr. Yushchenko.

Yushchenko adviser Oleg Medvedev charges: "The principles of
free and fair elections are being violated." Sergei Tigipko, the Yanukovych
campaign manager, emphasizes the positive: "The most important thing is
that both candidates can freely talk around the country."

The most common complaint is that Mr. Yanukovych gets more,
and more favorable, press attention. However, his supporters point out, he
is the sitting Prime Minister. And biased television coverage is hardly
unknown in America.

The print media are more balanced, despite local government
interference. Rostyslav Khotin, editor of the Ukrainian section of BBC
World Service, says the media are "under pressure but you can get
information."

Another concern, observed one Western diplomat, are "credible
reports of tax authorities and police paying special attention to businesses
backing Yushchenko." Some oblast (or state) governors have forced
people to sign petitions and attend rallies."

But assigning blame isn't easy. President Leonid Kuchma, the
powerful head of state, is "believed to be behind" many of the problems,
explains one U.S. official. Indeed, he adds, the Prime Minister's staff says
"a lot of bad stuff is coming out of Kuchma's office and Yanukovych
doesn't want to cross him, which has credence."

Observes expatriate businessman Alex Kiselev: "In fact, very
well known that the relationship [between Yanukovych and Kuchma] is
a rocky one." In fact, many Yanukovych supporters genuinely seem to
be as wary of Mr. Kuchma and his associates as are Yushchenko
backers.

A top American official notes: Mr. Yanukovych "says the right
things privately. He kind of says the right things publicly." That is, Mr.
Yanukovych calls for a free and fair election, but doesn't denounce
specific abuses.

However, "We don't always do so in the U.S. so we can't hold
them to a higher standard here," the official wryly observed. Still he adds,
Washington has suggested specific steps the Prime Minister could take to
promote fairness but hasn't.

Unfortunately, the U.S. has become an election issue.
Administration criticisms of Kiev have left the impression Washington
hopes to influence the outcome.

Moreover, Russia's Vladimir Putin is perceived to be boosting
Mr. Yanukovych, "The Kremlin is actively involved in the campaign,"
charges Medvedev.

However, some of Mr. Yanukovych's allegedly "pro-Russian"
initiatives, such as raising the status of the Russian language, are
primarily matters of domestic politics.

Moreover, geography and history ensure Russian involvement.
One poll found 80 percent of Ukrainians believe Ukrainian-Russian
relations should be a priority.

Mr. Yushchenko is seen as pro-Western but his coalition includes
nationalists and anti-Semites. A U.S. diplomat says: If he comes to power
I don't think you will see an increase in anti-Semitism. But you are more
likely to find anti-Semitism in western than eastern Ukraine, and that is
his power base."

Ironically, given the campaign-generated controversy, both
candidates seem likely to govern from the center. Konstantin Bondarenko
says they "pretty much meld into one."

The Yushchenko camp argues differently. But the candidates'
differences over policy toward the U.S. and Russia seem small.

Mr. Tigipko, a likely Prime Minister under Mr. Yanukovych, says
Russian ties "do not prevent Ukraine from getting integrated into the WTO
and cementing an association with the EU."

Mr. Bondarenko asserts: "Even though there are a lot of
simplistic assessments that Yushchenko is pro-West and Yanukovych is
pro-Russia, everyone understands that they will have to take a balanced
position."

Ukraine's election has been free if not entirely fair.
Legitimate criticism of campaign abuses should not obscure the fact
Ukrainians are freely choosing their new president.

Dimitro Ponamarchuk of the Union of Free Journalists says, "The
situation of democracy in the country is improving step-by-step." With
continued work, Ukrainians will turn their political system into a true
liberal democracy. -30- [Action Ukraine Report Monitoring Service]
---------------------------------------------------------------------------
Doug Bandow is a senior fellow at the Cato Institute, Washington,
D.C. and a nationally syndicated columnist. [Article published with
the permission of the author.]
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ACTION UKRAINE REPORT-04, No.215: ARTICLE NUMBER TEN
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10. AZAROV FORECASTS INFLATION UP TO 9.5% IN 2004

Ukrainian News Agency, Kyiv, Ukraine, Thu, November 11, 2004

KYIV - First Deputy Prime Minister, Finance Minister Mykola Azarov
forecasts inflation in 2004 at the level below 9.5%. Azarov told this to
journalists. "I think (inflation) will be no higher than 9.5%," he said.

Deputy Finance Minister Serhii Kharchenko informed in early November
that government does not plan to revise its inflation forecast of 8.5% soon,
after it downgraded its inflation forecasts for 2004 from 7-7.6 to 8.5% in
October.

As Ukrainian News earlier reported, the January-October inflation tallied
7.9% and in 2003 it was 8.2%. The government had earlier forecasted
2004 inflation within the limits of 5.8-6.3% (December to December of
last year), and the average annual inflation rate at the level of 6.7%. The
Economy Ministry forecasts 6.2% inflation for 2005. -30-
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ACTION UKRAINE REPORT-04, No.215: ARTICLE NUMBER ELEVEN
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11. STATE RESERVE SUPPORTS AGRICULTURAL POLICY
MINISTRY'S INTENTION TO CREATE AGRICULTURAL FUND
Will engage in daily regulation of the foodstuff market

Ukrainian News Agency, Kyiv, Ukraine, Thu, Nov 11, 2004

KYIV - The State Committee for Material Reserves (the State Reserve)
supports the Agricultural Policy Ministry's intention to create an
Agricultural Fund in 2005 for regulating the foodstuff market.

The State Reserve's Chairman Mykola Pesotskyi announced this to
journalists. "I support the view of the minister of agricultural policy on
creating a foodstuff reserve," he said.

He noted that the role of the State Reserve in regulating the foodstuff
market would reduce as a result. According to him, the State Reserve
will switch to accumulation of commodity and material values for a
special period while the Agricultural Fund will engage in daily regulation
of the foodstuff market.

"We should preserve our role as the main accumulator in the country
for a special period... if they continue to use us for daily work, then we
will lose our function that is stipulated in the Law on the State Reserve,"
Pesotskyi said.

As Ukrainian News earlier reported, Agricultural Policy Minister Viktor
Slauta said in November that the Agricultural Policy Ministry intended to
create an Agricultural Fund for regulating the food market.

The Agricultural Fund will be a structural unit of the Ministry of
Agricultural Policy and will deal with holding of interventions and
collateral purchases of food products. The money in the Agricultural
Fund will be used for buying certain types of grain and sugar in 2005.

The draft national budget of Ukraine for 2005 envisages UAH 1.2 billion
for creation and functioning of the Agricultural Fund. The Agricultural
Fund plans to use private and state capacities for storage of food
products (Khlib Ukrainy, State Committee for Material Reserve). -30-
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ACTION UKRAINE REPORT-04, No.215: ARTICLE NUMBER TWELVE
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12. RUSSIA, UKRAINE PLAN NEW EARTH SATELLITE

UPI, Moscow, Russia, Wed, Nov 09, 2004

MOSCOW - Russia and Ukraine plan to launch a new earth observation
satellite later this year, Interfax news agency said Tuesday.

Ukraine and Russia are planning to launch the Sich-1m satellite, designed
to study Earth, in December 2004, a source in the Ukrainian National
space agency told Interfax.

The project of joint development and usage of the Sich-1m satellite enjoys a
high priority in the Russian-Ukrainian space exploration program, the news
agency said. Sich-1m is a modification and an upgrade of another Sich-1m
satellite that was successfully launched in 1995, it said.

The two former Soviet republics continue to closely integrate their
respective space programs. The largely Ukrainian-built Dnepr booster rocket,
an adaptation of the military RS-20, known by NATO as the SS-18 Satan
regularly launches Western communications satellites from the Russian-run
Baikonur Cosmodrome in Kazakhstan. -30- [Action Ukraine Monitoring]
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ACTION UKRAINE REPORT-04, No.215: ARTICLE NUMBER THIRTEEN
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13. KENYAN FIRM REPORTEDLY UNDER PROBE IN
UKRAINE OVER ARMS TRADE

NAIROBI - A Kenyan company is at the centre of an investigation into a
multi-billion shilling illegal weapons trade in the Ukraine. The company was
expected to deliver the shipment of aircraft and surface-to-air missiles,
long-range multiple rocket launchers, anti-tank missiles, radars and
machine-guns to an Iraqi customer, said Mr Serhiy Rudenko, a spokesman
for the Ukrainian prosecutor-general's office.

Four people - from Greece, Iraq and Pakistan - were early this year arrested
on suspicion of the illegal weapons trade which was intended to procure
sophisticated weaponry worth more than 64bn shillings (800m dollars) for
an unspecified force fighting in Iraq, the ITAR-Tass news agency reported.

The report did not specify which Iraqi force was a potential buyer of the
weapons. Earlier this year, Mr Rudenko said the four also tried to hire
mercenaries to fight in Iraq and other conflict areas.

Ukraine has long been under scrutiny for murky weapons deals and mis-
handling of its vast weapons depots inherited after the Soviet collapse,
including the 2002 alleged sale of sophisticated radars to former Iraqi
President Saddam Husayn. The allegation, which President Leonid Kuchma
has vigorously denied, badly strained relations between the United States
and Ukraine.

Kenya has been cited as one of the most important transit points for illegal
firearms. Efforts by the Nation to identify the company were unsuccessful,
but local arms trade experts say the company may be registered in Kenya
merely as a cover. There is no known producer of heavy armaments in eastern
and central Africa although the Great Lakes region has been the theatre of a
long-running conflicts in Rwanda, Burundi, Uganda and Congo. Ukraine has
been the source of tanks and military helicopters imported by Uganda and
rebels in southern Sudan.

A report prepared by the US Department in Washington three years ago
named a Russian fugitive and tycoon Victor Bout as a leading illegal guns
exporter to Kenya with Kilindini Port in Mombasa as a major conduit. Mr
Bout was said to be holed up in the United Arab Emirates where efforts to
capture him or curtail his operations had not been successful.

The tycoon and other arms traffickers were then reported to have been
involved in the transportation of weapons and other military supplies to
several countries in Africa using different routes. The weapons are smuggled
into the region by an underworld cartel through an elaborate network. The
international gun-runner was said to operate from Angola, Cameroon, the
DRCongo, Libya, Rwanda Sierra Leone, Sudan and Uganda. All illegal guns
entering Kenya emanated from these countries.

Some of the African airfields Mr Bout is said to be using frequently
included Entebbe, Goma, Kigali and Luanda while seaports include Mombasa,
Dar es Salaam, Djibouti, Durban, Luanda and Monrovia. The desire for easy
access to Africa's immense mineral and forest resources has tempered the
illegal arms trade to the extent that the UN found it difficult to bring
arms traders to book.

While Mr Bout, who the UN accuses of stocking conflicts in the Great Lakes
Region is a known arms dealer, the protection he enjoys from governments of
Rwanda, Central African Republic an Angola meant his activities could not be
exposed internationally. He is said to enjoy protection of some governments
in the region, having once lived in Rwanda where his merchandise is said to
have stoked the 1994 genocide in which almost one million people were
killed.

The investigations in Ukraine are continuing and are likely to shed more
light on the Iraqi fighters' group for which the arms were meant and whether
any of the arrested suspects have any Kenyan connection. -30-
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ACTION UKRAINE REPORT-04, No.215: ARTICLE NUMBER FOURTEEN
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14. UKRAINIAN PRESIDENT PREPARES TO VACATE HIS OFFICE
AND HEAD THE LEONID KUCHMA FUND

ITAR-TASS, Moscow, Russia, Thu, Nov. 11, 2004

KIEV - The Ukrainian president prepares to change the place of his job:
the Leonid Kuchma Fund will be launched on Thursday. Kuchma headed
the Ukrainian state for two terms. Elected president in 1994, he coupled
his success in 1999, beating leader of Communists Pyotr Simonenko in the
run-off.

Under the Ukrainian Constitution, one and the same person cannot occupy
the highest post in the country for more than two terms. Kuchma's successor
will be known after November 21. The run-off is contested by premier
Viktor Yanukovich and opposition leader Viktor Yushchenko. Kuchma will
be ready for this event to hand over power to the winner. Premises for his
fund were chosen in downtown Kiev, not far from his present residence,
situated in the Bankovskya Street.

The launching of Kuchma's new book "My own way" will take place
simultaneously with the fund's opening. The book deals with economic
aspects of establishing and developing the Ukrainian economy. The first
book "Ukraine is not Russia" by Kuchma evoked great response in
political quarters as well as among ordinary readers last year. -30-
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